MtGox claims to have a fix ready for Bitcoin withdrawal woes

Customers to get access to their funds real soon now, like

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Bitcoin exchange MtGox says its customers should soon be able to withdraw Bitcoins from their accounts again, although the company is still not sure just how long the process of restoring access will take.

MtGox suspended withdrawals last Monday after claiming it was hampered by a security flaw related to "transaction malleability," a known property of the Bitcoin protocol that critics say MtGox should have addressed years ago.

Over the weekend, MtGox said it was working with Bitcoin wallet provider Blockchain.info to come up with a temporary fix for the malleability issue until a longer-term solution could be found.

"Thanks to our friends at Blockchain.info, MtGox now has a workaround that will use a unique identiﬁer created by Blockchain to show whether transactions have been modiﬁed or not," the company wrote on Monday [PDF]. "This will prevent any fraudulent use of the malleability issue and protect the assets of our customers."

But MtGox says the fix still can't be put in place right away. The new code must first be deployed, the Bitcoin blockchain must be reindexed, and MtGox has to implement a new withdrawal queue that it says still needs to be tested.

The company also says it won't reinstate withdrawals all at once – suggesting perhaps that MtGox is trying to avoid a run on its accounts once frustrated customers have access to their funds restored.

"At the beginning we will [resume withdrawals] at a moderated pace and with new daily/monthly limits in place to prevent any problems with the new system and to take into account current market conditions," MtGox said in its statement today.

Meanwhile, other Bitcoin exchanges have similarly been scrambling to shore up their systems, after the publicity of the MtGox affair led to a string of fraudulent transaction attempts and denial-of-service attacks across the Bitcoin community.

MtGox has not said how long the re-implementation and testing of its new withdrawal queue will take, but it has promised to issue an update on its progress no later than Thursday. ®